The Dow Jones had a great year in 2016. The leading index delivered a price return of 14% and paid a dividend yield of 2.7% for a total return of almost 17%. Any way you look at it that is an excellent year for U.S. stocks. However, you could have… Read More

Things are finally turning around for income investors. Years of ultra-low interest rates forced income investors to crowd into just a few risky, relatively high-yielding investments. But in 2016, a trifecta of economic occurrences began to improve the income investing landscape for everyone. #-ad_banner-#The first reason is that the FOMC has started to raise interest rates. The December 2015 decision was the first time in a decade that this rate had been changed. The committee made a unanimous vote to increase the Fed’s main interest rate by a quarter-point, to the 0.25% to 0.50% range from the previous 0.00% to… Read More

Things are finally turning around for income investors. Years of ultra-low interest rates forced income investors to crowd into just a few risky, relatively high-yielding investments. But in 2016, a trifecta of economic occurrences began to improve the income investing landscape for everyone. #-ad_banner-#The first reason is that the FOMC has started to raise interest rates. The December 2015 decision was the first time in a decade that this rate had been changed. The committee made a unanimous vote to increase the Fed’s main interest rate by a quarter-point, to the 0.25% to 0.50% range from the previous 0.00% to 0.25%. This rate has since been increased again, this past December, to the range of 0.50% to 0.75%. The increase signals the FOMC’s confidence in the strengthening U.S. economy and what officials see as nascent signs of climbing inflation. Second, the election of Donald Trump resulted in a sharp increase in bond yields. This selloff augmented a trend that started before the presidential election. Yields on the benchmark U.S. bond, the 10-year Treasury note, have surged to 2.31% from a 52-week low of 1.32%. The new administration is expected to put policies in place that will increase inflation, which… Read More

Inflation. It’s something that investors haven’t had to contend with for a long time. If anything, deflation has been the bigger concern. But that all changed on November 8. Since then, inflation fears have been roaring back in a big way. Just look at some of the headlines. “Dollar Strength will continue as Trump Policies Fuel Inflation” — CNBC “Fed May Have to Raise Rates Faster to Keep Up With Inflation” — Morningstar “US Inflation Expectations Gathering Steam” — Financial Times Higher Inflation Under President Trump — Business Insider GDP, Inflation and Interest Rates Forecast to… Read More

Inflation. It’s something that investors haven’t had to contend with for a long time. If anything, deflation has been the bigger concern. But that all changed on November 8. Since then, inflation fears have been roaring back in a big way. Just look at some of the headlines. “Dollar Strength will continue as Trump Policies Fuel Inflation” — CNBC “Fed May Have to Raise Rates Faster to Keep Up With Inflation” — Morningstar “US Inflation Expectations Gathering Steam” — Financial Times Higher Inflation Under President Trump — Business Insider GDP, Inflation and Interest Rates Forecast to Rise Under Trump — Wall Street Journal “Trump Victory Prompts Fund Managers to Focus on Inflation” — Reuters Merrill Lynch recently surveyed the nation’s mutual fund managers and found that 85% — nearly nine in ten — see rising inflation on the horizon. That’s the highest conviction for inflation in 12 years. —Recommended Link— Act Before The New Year Find out how to get our list of the Top 10 Stocks for TrumpNation 2017 — completely FREE of charge! Check out the report here… The core thrust of their argument goes something like this… Trump’s tax cuts… Read More

They said they would do it, and they did it. And they just told us to brace for more. The U.S. central bankers last week hiked the main interest rate for just the second time since the Great Recession.  This 25 basis-point increase in the Fed Funds rate, which just happened to come about a year after the first one tripped up the stock market rally, was telegraphed well in advance. Almost everyone expected this result as the Federal Open Market Committee (FOMC) meeting concluded on Wednesday, Dec. 14.  Even before the December meeting, U.S. Treasuries of all maturities came… Read More

They said they would do it, and they did it. And they just told us to brace for more. The U.S. central bankers last week hiked the main interest rate for just the second time since the Great Recession.  This 25 basis-point increase in the Fed Funds rate, which just happened to come about a year after the first one tripped up the stock market rally, was telegraphed well in advance. Almost everyone expected this result as the Federal Open Market Committee (FOMC) meeting concluded on Wednesday, Dec. 14.  Even before the December meeting, U.S. Treasuries of all maturities came under selling pressure, with interest rates rallying. One reason was the widespread optimism about economic growth and the ensuing equity rally. Another reason was the market speculating that the economy was strong, and that economic data would mean the Fed guiding for more than two rate hikes in 2017. In fact, it’s likely that not two but three interest rate hikes are in the cards for 2017. This is what the Fed signaled at the December meeting, and, given the latest economic data combined with policy outlook, this scenario seems plausible.  Investors, especially income-starved retirees, have many questions: What will… Read More

The financial services industry underwent a massive transformation on July 21, 2010, when the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into federal law by President Obama. Dodd-Frank was one of the largest regulatory overhauls any U.S. industry has ever seen.  It was designed to reduce the concentration of risk in the financial sector. Whether it achieved that goal depends on who you ask. #-ad_banner-#Some say it helped curb reckless trading at the big banks — the kind of trading that left the industry bankrupt in 2008. Others say it hurt small businesses with its expensive-to-implement compliancy… Read More

The financial services industry underwent a massive transformation on July 21, 2010, when the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into federal law by President Obama. Dodd-Frank was one of the largest regulatory overhauls any U.S. industry has ever seen.  It was designed to reduce the concentration of risk in the financial sector. Whether it achieved that goal depends on who you ask. #-ad_banner-#Some say it helped curb reckless trading at the big banks — the kind of trading that left the industry bankrupt in 2008. Others say it hurt small businesses with its expensive-to-implement compliancy programs at regional and local banks. It’s easier for big banks to absorb these expenses. I say it’s probably a little bit of both. Today — almost eight years after it was passed — Dodd-Frank is about to get a big makeover. This is a profit trigger for the world’s largest derivatives exchange and that pays a “secret” 4.5% dividend. Let me explain. Dodd-Frank Is Set For A Major Overhaul Under The Incoming Treasury Secretary The U.S. Secretary of the Treasury is one of the most powerful and influential cabinet positions. The Treasury controls federal regulations for business, banking,… Read More

November was a scary month for bond investors. The Bloomberg Barclays Global Aggregate Total Return Index fell 4% in November, shedding a record $1.7 trillion in value. That loss ranks as the worst monthly performance since the index was created in 1990, more than 26 years ago. And some of the “safest” bond-related ETFs in the market fared even worse. The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) was down 8% in November for a total of almost 20% since July. Similarly, the iShares 7-10 Year Treasury Bond Fund (NYSE: IEF) is down 9% from its 52-week high and… Read More

November was a scary month for bond investors. The Bloomberg Barclays Global Aggregate Total Return Index fell 4% in November, shedding a record $1.7 trillion in value. That loss ranks as the worst monthly performance since the index was created in 1990, more than 26 years ago. And some of the “safest” bond-related ETFs in the market fared even worse. The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) was down 8% in November for a total of almost 20% since July. Similarly, the iShares 7-10 Year Treasury Bond Fund (NYSE: IEF) is down 9% from its 52-week high and the iShares IBoxx Investment Grade Corporate Bond Fund (NYSE: LQD) is down 7% from its 52-week high. These losses are being driven by a tectonic shift at the Federal Reserve — the central banking system that controls U.S. interest rates. For the first time in 10 years, the Fed has raised interest rates. #-ad_banner-#This has big implications for bond investors — when interest rates go up, most bond prices go down. This is what triggered the huge capital outflow from bonds in November, as investors were pricing in a rate hike. A lot of short-term capital that was… Read More

The energy sector was a brutal place to invest in 2014 and 2015. In the 18 months from July 2014 to January 2016, the Energy Select Sector SPDR ETF (NYS: XLE) fell nearly 50%. That decline was driven by a collapse in the price of oil, buckling from above $90 per barrel in the summer of 2014 to below $30 in January 2016. #-ad_banner-#Today, this bear market has ended. With a new bullish cycle unfolding, this is the best time to invest in energy stocks in the last five years. Not only are energy sector yields near a multi-year high,… Read More

The energy sector was a brutal place to invest in 2014 and 2015. In the 18 months from July 2014 to January 2016, the Energy Select Sector SPDR ETF (NYS: XLE) fell nearly 50%. That decline was driven by a collapse in the price of oil, buckling from above $90 per barrel in the summer of 2014 to below $30 in January 2016. #-ad_banner-#Today, this bear market has ended. With a new bullish cycle unfolding, this is the best time to invest in energy stocks in the last five years. Not only are energy sector yields near a multi-year high, valuations are near a multi-year low. Perhaps most important, profits are set to rebound thanks to a breakthrough announcement from the Organization of Petroleum Exporting Countries (OPEC). Last week, OPEC made its biggest announcement in more than two years, saying that its members would cut global oil production by 1 million barrels per day beginning January 1, 2017. This decision has big implications for the price of oil in the short run and long run. In the short run, it caused the price of oil to jump more than 10% in one day, hitting $50 a barrel for the first… Read More

You know it’s December when you begin hearing long sets of holiday classics on the radio, when you start seeing gift-wrapped cars with huge bows on TV, and when you simply cannot escape reading about the Santa Claus rally in the financial press. In keeping with some of these traditions, I present to you an idea that seems both timely and appropriate for the next year: a position in an asset management company. Why do I like asset managers, particularly right now? The idea might seem controversial — but I think it allows us to make use of several market… Read More

You know it’s December when you begin hearing long sets of holiday classics on the radio, when you start seeing gift-wrapped cars with huge bows on TV, and when you simply cannot escape reading about the Santa Claus rally in the financial press. In keeping with some of these traditions, I present to you an idea that seems both timely and appropriate for the next year: a position in an asset management company. Why do I like asset managers, particularly right now? The idea might seem controversial — but I think it allows us to make use of several market trends and expectations. —Recommended Link— Banned Since 1933 — Now Open For Investing This year, the SEC cracked open a door it had kept shut since 1933. They finally allowed everyday investors to get into explosive early-stage companies BEFORE they go public — while they are still in their strongest growth curves. But here’s the thing… there’s only one way you can get into these startups — and here’s how it works. Global asset manager AllianceBernstein Holding L.P. (NYSE: AB) is a good place to turn, allowing us to take advantage of the stock market’s strength while providing a… Read More

I flew into Cabo San Lucas, Mexico a few months ago and made the mistake of exchanging my money at the airport rather than a local bank or financial institution. If drinking the local water is mistake #1, then this one isn’t far behind. I was paid an exchange rate of just 15/1, so my $1,000 turned into 15,000 pesos. Had I walked a few blocks away, the going rate was closer to 18/1 — meaning I could have traded my dollars for 18,000 pesos instead.   #-ad_banner-#3,000 pesos buys a lot of Pacifico beer. And this isn’t just my… Read More

I flew into Cabo San Lucas, Mexico a few months ago and made the mistake of exchanging my money at the airport rather than a local bank or financial institution. If drinking the local water is mistake #1, then this one isn’t far behind. I was paid an exchange rate of just 15/1, so my $1,000 turned into 15,000 pesos. Had I walked a few blocks away, the going rate was closer to 18/1 — meaning I could have traded my dollars for 18,000 pesos instead.   #-ad_banner-#3,000 pesos buys a lot of Pacifico beer. And this isn’t just my experience — the Mexican peso has been one of the weakest currencies in the world for the past three weeks. Since November 8, its value has fallen more than 15% against the U.S. dollar. That selloff is largely being driven by U.S. President-elect Donald Trump. Investors are worried Trump will restructure trade agreements between the United States and Mexico or levy tariffs on Mexican exporters. If that happens, it could be a huge drag on the Mexican economy. The weak peso has caused somewhat of a panic in Mexican stocks. In the past three weeks the iShares MSCI Mexico Capped… Read More

Cutting-edge and high-yield are not two terms that are heard together often. Cutting-edge conjures up thoughts of growth focused internet or high-tech firms creating novel products and services. High-yield, however, makes one think of stodgy, slow-growing REITs or blue-chip stocks producing a high dividend yield but not much upside. Despite… Read More